This article has been authored by Mayank Barman, a third year student of law at Department of Law, University of Calcutta.
Diversity of arbitrators would be the last thing in the minds of the parties during the arbitration proceedings and to that effect, would have little impact on the outcome of the proceedings too. However, the case for diversity in the context of international arbitration has assumed great attention across the globe due to the increasing geographic and sectoral divide among the parties.
As Paula Hodges’ puts it,
‘just as diversity brings richer results, richer decision making in all walks of life, it’s exactly the same for arbitrators.”
The Gender Gap in the Appointment of Arbitrators: Perceived Hurdles
Two schools of thought namely, the supply-side issue and the demand side issue explain the reasons for a gender gap in the appointment of arbitrators.
The Supply-side factors
The “pipeline” factor could be understood as the reasons one could attribute having a strong track record of professional expertise which historically, men through legal education, association memberships, and work experience have been able to attain while their counterparts (women) have been neglected. In most International Commercial Arbitration cases, the arbitrator is appointed from this limited pool of highly qualified candidates where women have been underrepresented. The parties prefer experienced arbitrators having a proven track record and often, it is the older male arbitrators who tend to have an advantage here, thereby making it extremely difficult for women to bridge this gap. Often, there is a dearth of information in the public domain to assess an arbitrator. The lack of objective information about arbitrators leads to a selection based on global rankings published on various websites and intuition of the parties
A 2017 survey by the Solicitors Regulation Authority, reveals women constitute 48% of the lawyers working in law firms, however, only 20% of them are appointed arbitrators in leading arbitral institutions.
Parties love to have experience on their side, and this is one of the core challenges to gender diversity in International Arbitration. In 2018, only 13% of arbitrator appointments administered by the London Court of Arbitration (LCIA) were “fresh” candidates. Similarly, though the number of first-time appointments in the Hong Kong International Arbitration Centre (HKIAC) was higher than the LCIA, yet 14.4% in the year 2017, reflects the gravity of the issue.
The Demand Side Factors
Party autonomy is an unfettered right of the parties and unless delegated to the arbitral institution, the parties have the final word in the appointment of arbitrators in most institutions. In 2018, the figure was 46% for the London Court of International Arbitration (“LCIA”), 48% for Vienna International Arbitral Centre (“VIAC”) and 57% of International Chamber of Commerce (“ICC”). Though the pipeline factor is the most important factor behind the gender gap in the appointment of arbitrators, the demand side of it can’t be looked down upon. Gender stereotyping and bias results in the opaque appointment of arbitrators to these institutions despite the fact a woman could be equally or higher qualified than their male counterparts.
Parties and in-house lawyers rely heavily on external counsels to shortlist arbitrators. External counsels tend to take the “safe” option by appointing the same arbitrator used in the past, thus, reinforcing the issue of repeat appointments. Mirroring the type of candidate, they would expect the other side to nominate to counterbalance the gravitas, is another reason why male candidates are preferred over female candidates.
Why does Gender Diversity matter?
Evidence suggests that financial performance in companies is better when there is gender diversity. On the other hand, others have opined that inculcating diversity in arbitral institutions will lead to an expansion of greater choice and lesser conflicts. The Chief Justice of the Australian Federal Court in 2015 commented that “male-club-like-blokeiness in the conduct of litigation” needs to be eliminated and the same could be achieved through gender diversity in the judiciary. The same holds true for arbitration.
Several scholars opine that diversity in International Arbitration enhances the legitimacy of the system globally. Diversity leads to a reduction in “group thinking” which is a “mode of thinking in which individual members of small cohesive groups tend to accept a viewpoint or conclusion that represents a perceived group consensus, whether or not the group members believe it to be valid, correct, or optimal.” Diversity in the panel of arbitrators could reduce the occurrence of this phenomenon by bringing in a variety of perspectives into the table which otherwise would not have been possible in case of a homogenous pool.
Initiatives to Address the Gender Imbalance
Dissatisfied with the status quo, arbitration pledge has been increasingly becoming popular to promote adequate gender representation in arbitral institutions. Usually undertaken by lawyers, arbitrators, scholars among other professionals, one of the widely recognised pledges - Equal Representation in Arbitration (ERA) Pledge aims to recognise the profiles and representation of women and also make the appointment of women arbitrators on a level-playing field. The Pledge has received an overwhelming response including, but not limited to lawyers, leading arbitration institutions, professionals from other sectors, all aimed at creating awareness for a gender-neutral arbitral regime.
Jacomijn Van Haersolte von Hof, Director General of the London Court of International Arbitration (LCIA), rightly points out on the dearth of data with respect to diversity in International Commercial Arbitration, and if nothing else is achieved out of the pledge, the amount of global support it has received is truly remarkable. He further stresses on the importance of stakeholders of International arbitration to take diversity seriously. To quote him, “We all have a responsibility in respect of diversity and interest to gain from improving diversity in international arbitration. However, the change will not happen without decisive actions from all players.”
Moreover, professional networks such as “Arbitral Women”, “Alliance for Equality in Dispute Resolution”, usage of arbitrator and research tools are also striving for gender diversity in arbitration.
Arbitral institutions have started publishing statistics and data related to arbitral appointments and the panels, making the process transparent. In 2012, the International Chamber of Commerce (“ICC”) said that it did not record the number of women appointed in ICC arbitrations. In 2016, the ICC published not only the names and nationalities of the parties but whether the choice of appointment of arbitrator(s) was made by the parties or by the institution itself, along with other notable institutions being the Hong Kong International Arbitration Centre (HKIAC), the German Arbitration Institution (DIS) and the Swiss Chambers’ Arbitration Institution (SCAI). Secondly, institutions taking the front seat and determining who deserves a seat at the tribunal provides flexibility to mix and match the arbitrators where the parties fail to decide on their decision-maker(s).
Lucy Greenwood suggests usage of the “blind appointment” system to strike the gender balance. The system would remove all proposed names of arbitrators and standardise the Resumes of potential arbitrators for the dispute before it. After the blind shortlisting of arbitrators, the anonymised list of arbitrators would be sent to the parties to the final shortlisting. If the party desires to move ahead with a profile, they could contact the institution and have access to more information about the concerned arbitrator.
Malcolm Gladwell goes on to say “...mediocre people find their way into positions of authority...because when it comes to even the most important positions, our selection decisions are a good deal less rational than we think.” In International Arbitration, the procedure for selecting an arbitrator is not that significant given the fact that parties mostly rely on three factors while choosing an arbitrator - nationality, legal education, and word of mouth. Such decision-making factors is largely due to the lack of objective information about the arbitrators at the disposal of the parties. One way to overcome this barrier is to use the Arbitrator Intelligence, which is a remarkable tool which provides information on published and unpublished awards and puts out feedback from users after the completion of the arbitral proceedings. This public database has the potential to store information about the arbitrators including their work experience and preferences, thus, bringing everyone on a level playing field irrespective of their religion, gender, caste or race.
As Professor Davis stated, “there are not as many as there ought to be, but it is slightly better than it was.” The presence of women in leading arbitral institutions worldwide ranges from 14% to 27%. The statistics collected from 2015-2018 reflect a continuous upward trend with the ICC reporting a spike of 7.2% increase in women arbitrators and the ICDR reflecting a spike of 17% in women arbitrators, although LCIA went through a downward spiral by 1% in 2018, which proves that though gender diversity initiatives have been successful, yet there is scope for the overall numbers to improve further. Though the arbitration pledge has been accepted with great enthusiasm, yet, it is important for the stakeholders to join hands, for the parties to realise that diversity is important and can produce better results and the arbitral institutions to lead from the front and acknowledge true potential.